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In advertising, it's swallow or be swallowed
By Guy Rolnik
Tags: Israel news

The first time I met Maurice Levy, CEO of the French advertising giant Publicis Groupe, was in January 2002, at a World Economic Forum conference in New York. I introduced myself and asked for an interview. Levy didn't hesitate for a moment. "Tomorrow at 6:30 A.M., breakfast at the Waldorf Astoria," he snapped and bade me good-bye.

I decided to arrive early. When I reached the Waldorf at 6:15, Levy was sitting at his table, ending an earlier meeting. He looked, as always, like a million dollars: tall, erect, not a hair out of place and with a charming smile.

This was four months after the September 11, 2001, terror attacks and six months after the dot-com bubble burst, taking with it the entire media and advertising market. A year later, 2002 was being called the worst year in four decades for the advertising business.
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Having established my own startup a year before, an Internet media company based on digital advertising, I was far from being full of joy and optimism at the time. Print media pundits were eagerly announcing the death of the Internet and dot-com era, and the stock markets were mining new rock bottoms. "The Internet is a great thing," said Levy, the man who had turned Publicis into one of the three global giants of the advertising industry. "I'd like to quote for you the French philosopher Henri Bergson, who said that if one thinks of something great, he should also think of a very long time." Two months after the interview Levy held a press conference in New York to announce his acquisition of the American advertising giant Leo Burnett, for $3 billion.

Levy was born in Morocco in 1942 to parents who had fled from France. He began working as a computer programmer for Publicis in 1971. A year later he saved all of the company's databases, when a fire broke out in its Paris offices. In 1987, after Publicis founder Marcel Blaustein-Blanchette died, Levy was named to replace him as CEO.

Jewish values

Levy, of course, is Jewish, as is his chief industry rival Sir Martin Sorrell, the founder and CEO of WPP Group, the world's largest advertising agency. In their race to the top Levy and Sorrell ran over the U.S. advertising giant Omnicom - headed by Michael Roth, who is also Jewish.

Levy speaks a great deal about Israel and about being Jewish. He know this annoys some of his clients but he has never tried to hide it. In the last decade he has never turned down a request by TheMarker for an interview or a background briefing.

In this interview, which took place at the World Economic Forum meeting in Dalian, China, he even declared that the management values of Publicis are none other than the values of Judaism.

Like all of our interviews with Levy, this one occurred just after he had swallowed up yet another giant company. This time it was Internet advertising firm Razorfish, which Levy bought from Microsoft for $530 million. As usual, his main rival for the acquisition was Sorrell.

Most of the CEOs I meet claim that the surge in financial markets is overblown and that the global economy is not yet recovering. I hear that you are more optimistic.

"I'm more optimistic for Publicis and the industry as a whole. We have but a few choices. A couple of years ago, we invested in digital media and in emerging markets, and these have helped us to mitigate the consequences of the downturn in publicity and in the economy in general."

What percentage of your revenues have shifted to the digital sector?

"With the acquisition of Razorfish, more than 25 percent of our revenue will be purely digital."

Is that above the industry average?

"The industry average is around 12 [percent]."

So much for revenues. What about profits?

"It is revenue. We do not disclose profitability. But the profit of our operation is below the average of the Publicis group because we are in an investment mode. We think that we will catch up to the group average in two to three years' time, and then the profitability of the digital sector will be higher than the profitability of the world . We are expecting to have roughly 50 percent of our revenues at the end of 2010 derived from digital and emerging markets. And even though the growth of these two segments is slowing down a little bit, at least we have growth, while in the analog [print] media or in the Western economies we have decline."

How sure are you that digital advertising will be more profitable than analog? Don't you fear that the digital sector is more competitive than the traditional areas in which you did very well for many years?

"It is a very competitive business, but I have never seen the advertising world when it was not competitive. We are living in a world which is highly competitive for a lot of reasons. First, it is a world of entrepreneurs, and entrepreneurs are competitive by nature. Second, it is a world in which egos are important, and obviously of people who want to show that they are better than the others. And third, it is a world where we have to define the brand of our clients. So we have also to take into account the competitiveness and the competitive spirit of our clients. So not only are we competing for us, we are competing for our clients. It's a very twisting world which has been always fueled by entrepreneurship and competitiveness."

In recent years you have bought up many digital companies. How do you ensure that your analog-oriented staff can cope with the digital world? Or do you simply replace them with digitally oriented people?

"This is a very important question, because we have a [corporate] population that is very different, and the [corporate] culture naturally is very different. We cannot expect to have the creative people who are used to working on 30-second TV commercials doing Web banners or Web sites . We have to keep the balance right between emerging markets, emerging media and natural markets and natural media. The way we do that is by thinking first about the client. If you start thinking about the personal issues, what you end up with are people with oversized egos. As soon as they are little bit successful they think they are the master of the world. They become complacent and they lose sight of what is important in our business. We should never forget that without the client we don't exist, and if we do exist, it is [in order] to invent for them. So if we start with the client at the core of what we are doing, we have a very fair chance of becoming successful and doing the right thing."

Is that working? Are people switching from analog to digital in the creative departments, in the planning department and in management?

"The first thing we have done is to create structures which are more mixed. We don't like the idea that digital people are in a kind of ghetto, even if it is a golden ghetto, and that traditional people are in another ghetto - and they don't communicate. It is very important that they are part of one team, so we structurally put them within the same environment. For example, we have created The Luckywhich, a subgroup that encompasses Publicis Stockholm, MediaVest, VivaKi , Performics, Digitas and now Razorfish. The management of this group is led by Jack Klues, together with the founder of [Publicis] Stockholm and David Kenny, founder of Digitas.

"So there is a partnership, a team. They share views, they share the decisions, they are working together and this has a formidable impact on the way we build the future. And in VivaKi , as of next year 50 percent of our revenues will come from digital. Fifty percent. Don't doubt these numbers. And this is huge. There is no one single agency in the world with this level of revenues.

"The second thing that we do is to make sure that when we are working on a subject, whatever the subject is, we have digital and analog people working together on the same thing. When we are looking, for example, for the launch of a new product, they are in the same room. And the idea can come from the classic media or from the new media, we don't care where the ideas come from. What we care about is that we have the best idea.

"What are doing is to migrate people from the classic analog world to the new world of digital. For two reasons: one, because we are losing jobs in the analog world, and two, we are creating jobs in the digital world. So if we want to be respectful to our people and if we want to be honest with them, we have to prepare them for the change. So we train them, we educate them and we have them moving from analog to digital.

"We have encouraging results. We do not yet have good results. It is modest, it is a beginning, it is difficult, because when you have people who have a lot of experience, who have been working for years on one subject and suddenly you tell them they have to work with kids who are better than them, there is a psychological problem which is difficult to overcome. There are also people who decided that they are used to working with a certain discipline, and working with a new discipline, which is most of the time no discipline, is very difficult.

You run a huge concern with many subsidiaries in a changing world. Isn't the greatest challenge you face generally with the people?

"Yes."

Problems of ego, social problems?

"Compensation [salary] problems."

Compensation is a problem that's always there.

"Ah, no, no, no, no, no, no. It's becoming more complex, because with compensation you have people from different disciplines living in different worlds. For example, the digital people come from the world of start-ups. They are used to having stock, they are entrepreneurs and they want to be rich very quickly. And obviously ego, which has been a problem and is becoming a problem multiplied by a factor of five or six. And complacency is also a big problem, because when people want to move fast they are relatively easily satisfied. OK, we move and OK, good, you say yes. When you look at the world, 'OK, maybe good' is not enough. And I think that one of the dangers of moving fast is that we can move to a cultural complacency, and this is something we have to fight against.

Isn't one of the problems that you employ many managers who were the founders of the companies you purchased, some of whom became multimillionaires along the way?

"Yes."

Is that sustainable? You buy some company, make its owner a very rich man and then expect him to work for the company on salary?

"It works in some cases and it doesn't work in some other cases. And the reason is not so much about being corporate Guy Rolnik or entrepreneur Guy Rolnik. Publicis is a culture of entrepreneurship. And we have always given a lot of work to our managers, we wanted them to feel free, to have the time and the possibility of making a lot of decisions, taking initiatives, being the ones who are proposing acquisitions or structuration. The problem is, some people, when they were entrepreneurs, they had the possibility of making a lot of decisions by themselves and sometimes they were taking some shortcuts in some areas, sometimes they making decisions based on inequality of treatment. Sometimes they thought the small clients did not deserve the same service as the large clients. All this created within the organization something which was working well, because it was a private company led by a charismatic entrepreneur. But when you work in a system, in an organization, in a network where you have to collaborate with other agencies and you have to rely on other people to develop the service, then you need to gain collaboration and for that you have to be collaborative. When you have been used to being a one-man-band it is very difficult. And when you have been, for years, building an agency based on inequality and now you have corporate people who say 'you know, you have to raise salaries so that the average salary is comparable with the other agencies, you have to comply with our rules.'

"The other aspect, which is probably the most important, is that people hide behind the idea of 'culture,' when in fact it is the idea of, to put it nicely, one charismatic leader. And it is 'his way.' In an organization like Publicis, where there is a lot of freedom, a lot of possibilities to bloom, to grow, the fact that we have to serve a client throughout the world, that we do regular assessments, that we are transparent, that we can't just decide any salary - all this makes some people a little bit uncomfortable. And I have seen more people leaving because of Maurice Levy, or the way we do things at Publicis, than because of a problem of culture or entrepreneurship. That is something which is objectively very, very, very rare."

Before we ask about building teams and creating cooperation between them, could you describe your organization for our readers, very briefly? How many people are accountable to you at Publicis?

"I don't know."

You don't know?

"Directors that report directly to me, not so many. There is the corporate staff and this is only four people. And there are the CEOs of the agencies."

Two of your very close staff members have left the company after 40 years. Isn't it hard to say good-bye to people you could rely on blindfolded?

"It has been painful and difficult. They were very close friends, real friends. We meet outside the office, having dinners, etc. I have new team members now and the average age here is 42."

How do you create complete trust inside a team when new people join it?

"It's something that in fact is not so difficult. At least in my view. It is a question of trust and for that you need to pick people who are good people as human beings. Before being good as professionals they have to be good human beings.

"Recently I decided to do something interesting geographically. My staff]was dispersed throughout the building and because we are renovating the building I decided that they will be all together and next to me. I decided that we will have something that is more fluid, more open, all the doors are open, it is transparent and we have meetings where we discuss every single issue, all together, so there is no reserved domain, something about which people have to speak to me personally, without the others. If we want to build a team spirit the only thing to do is to be totally transparent."

So much for the headquarters staff. But underneath you there are a number of directors of agencies, people who are much more independent, who run gigantic companies. The P12 executive committee.

"The P12 meets every other month, six times a year. It's a full day. Sometimes we have a dinner, and we start by sharing our work, so everyone shows his work. The first thing, one hour or less, is devoted to work. The best commercials, the best work. We look at this, we try to understand how we were able to do it, what were the issues, the difficulties, and how we were able to create some great work."

You mean the jobs you do for clients, not the financial results.

"Second, we share results. Everyone shows his own result. Not easy because sometimes people have good results, sometimes not as good. So, when it's not good we have to make sure that people are not humiliated, because if people are humiliated, then it's a big issue because they will get an inferiority complex, they will feel bad and the meeting will not be productive. So they know that they will not be blamed, and they know also that it is transparent. And that is something which is important.

"Then we discuss common strategies, common issues, for example, what's new in digital. The new trends of the industry, what we will do to hire the best people, offer the best training program, how will we compensate people, or we will speak about our growth, and shared service, etc., etc."

How do you make decisions?

We make decisions that will be easy to implement, or if not easy, than easier to implement, simply because everyone has participated in the decision, everyone has been part of it, they had the possibility and the ability to raise questions, to have a voice and when, at the end of the day, the decision is made it is consensual if not unanimous. That is how we are building teams."

Do the 12 people at these meetings feel that this is a totally genuine decision making process, or is it sometimes a decision made by Maurice Levy even before the discussion begins?

"Very often the ideas or decisions that they wanted to implement have not been implemented as they wanted them. Sometimes I have taken them off the table, sometimes I have had to adapt to them, sometimes the idea came from them. If you look at the kind of people we have around the table, you have CEOs, you have highly educated people with a lot of experience. They run operations of 5,000, some of them 10,000 people, so it's not a small thing. They are people that I respect and trying to make them swallow my decisions does not work. They are not stupid. So if I come with an idea and believe that they will swallow it simply because it's coming from me I know that they will resist and that it will not work. So, if I want to make it real it has to be something that they can sell to their own team and that they can explain to everyone without having to say, 'You know, it's coming from Paris, it's Maurice Levy again who decided to do that, I'm not very much in favor, but please, cope with it and do it,' I know it will not work. They have to make it their own, they have to own it and they have to like it. If they don't, I don't see the point."

How do you make a group of CEOs of subsidiaries, each of whom is responsible for his own profits and losses, cooperate and see the interest of the group as a whole?

"First, they have to be part of the dream of the group. So it is very important that we should not treat them as just people who are executing a strategy. They have to be part of what we do, they have to feel that they own a share of it."

It must be difficult. Most have their own brands, not the Publicis brand but rather strong brands, like Saatchi & Saatchi, and Leo Burnett.

"That is the game. And everyone has a role in the dream. For example: Saatchi & Saatchi had the creative image, the creative power. Now it is shared by many others. Second, there is the media division, which for years had been a very strong planning force. Now the digital are playing a big role. So everyone has been or does have a role which is very important. So, for example, if we want to implement shared services we cannot do it if they don't want to do it. It will not work. It's that simple."

And yet they must share your dream, the Publicis dream.

"That is one aspect. That aspect is not enough. They have two things which are linked to the group: Stock options. They receive shares of the group, and these are really shares of the group, not of a private company of the group. It is a public company, and the value of the shares is important to them. The second thing is that not only the P12, [but also] the bonus pools of all the operation are 25-percent linked to the business group objectives. So 25 percent of the compensation of everyone who receives a bonus [is connected] to the performance of the Publicis group [and] 75 percent [is based on] the performance of their own objectives. The bonus pool is for the management team. In one brand it will be 200 people, in another brand it will be 500 people."

You're saying that if Maurice Levy has decided to buy Razorfish at too high a price, all the managers will pay that price out of their next bonus?

"And the other way around."

The financial bonus is an incentive, but it is not enough to create team spirit. For people to work together they must first of all believe you completely.

"There is one thing that is important, I think, at least at the basic [level], and it has always been the way I have managed the agency, to be true to my word. So when I say to anyone 'this is what I'm going to do,' I do it. They have not to question, to ask, to remind me, they know that I will do it. When I tell somebody he is fair, they believe he is fair. When I say to somebody that I'm committing to something, he knows that I will really be committing. The other thing is that I'm always available to discuss the issues. If people have an issue they can reach me, they can send me an e-mail, I will answer the e-mail within 24, 48 hours. Sometimes less."

How many people does the group employ?

Thirty-five thousand.

How can you be accessible to 35,000 by e-mail?

"They are not all sending me e-mails. The ones who are [are] mainly the management team of all the operations. This is what we call the P1000, the 1,000 most important people. If somebody sends me an e-mail regarding an issue, a problem, he knows I will answer. People know that. So, when we are speaking about team-building, it is about confidence. If you tell somebody that you will do something and you don't, this person starts doubting, and to doubt is something which is a real poison. It's a snake. It's like in a couple, the day your wife doubts [you], it makes your life impossible.

To hear that from a Frenchman...

"And this is coming from a Frenchman."

Let's speak about culture. How do you ascertain that the organization culture that you cultivate and believe in spreads through the entire organization?

"That is the most difficult thing, in absolute terms and in relative terms. In absolute terms because it is true for all organizations, particularly international organizations, and when you have a culture which is like ours, a subculture, made of human values, etc., it is difficult to have it spread and respected everywhere. In our case it is even more difficult. First because Publicis was built by Marcell Blaustein-Blanchette, and he created a culture of a family business with Jewish values, taking care of the people, caring about the ones who are the poorest, etc., etc. And a spirit of freedom, of confidence and being on top of everything. And this is something which has to be shared with 45,000 people around the world and through many acquisitions and agencies [that] had different cultures, different approaches, it is very, very difficult."

It sounds impossible. How do Digitas and Razorfish assimilate Jewish values?

"I have had several meetings to define our culture in words. So we can put words behind [our] ideas and behavior, so people do not need to eat gefilte fish in order to understand what we are saying. When we were a small company, we had a small manual, a few pages, which was called 'some values and principles.' Now we have something that is much more complete. We started with an idea which we called 'The PCP's - The Publicis Corporate Policies' and we had the policies, the values and the processes, and few people read [it]. It was thick, it was difficult to read. It was not friendly. Something which is fairly recent is called Janus."

Janus, the two-faced Roman god?

"Janus, of two faces. He is the god of values, he is the god of processes. He had one face of being nice and explaining, and one face of being tough and punishing. One face that is looking at our tradition, and one face looking at the building of the future. And it is written in nice English, accessible and highly detailed, so people understand, for example when we say that we should not give gifts to client that could be embarrassing, we explain, because this has to be understood, and there are all [kinds of] attitudes and cultures. For examples, in some countries it was almost normal to offer a client a jewel or a TV set or a home video, and we had to put an end to that because these are the kinds of practices that don't work in our culture. And people understand, because..."

But there are countries where bribery like that is the usual practice. How do you work there?

"We have a high level of ethics. People know that we do not give bribes. We refuse kickbacks, we refuse coercion. In some countries we don't go, and we are not yet in some countries, simply because we don't want to be involved in ways of dealing which are not in agreement with our own culture."

Is this Janus open to the public? Can I see it?

"It is not open to the public [unless you are] P12 or P1000. They cannot have a hard copy, they have to look on the Web, and there is a security level so they cannot download it. We don't want it to go to our competitors. It has taken a lot of time to build it and we want to keep it."

Earlier you mentioned stocks and options that you issue to senior managers. I looked at your stock and it has been doing well compared to the shares of your competitors this year, and over the past five years. But over time your stock, like that of most advertising agencies, has been marking time for the past 10 years. The question is whether it's possible to continue relying on options as a significant means of emolument in an era when your industry is no longer generating significant profits for shareholders.

"If you look at the [performance of the stock over time], clearly it is not very pleasant because we have suffered, so the [value of the] stock is not really great. But because the [value of the stock has] also multiplied, the value of the group has been multiplied by I don't know how much. I believe we have done quite well. We can always do better, there is no question. But if you look at the performance of Publicis this year, we are outperforming all our peers."

So if the stock is marking time because that's the situation in the industry, how do you measure your performance?

"We want to have the best organic growth and the best margin. So we measure ourselves against our competitors on the two things that are the most important - growth, organic growth [and] not the growth through acquisition; and the margin, the operating margin, measured against the competition."

At your age and with your experience, you surely must be able today to determine what you do outstandingly well, and what you do less well.

"It's difficult for me to say what I'm good at because I'm never happy, I'm never satisfied. I'm very demanding and I always think that I can do better."

What have you done well?

"For example, the switch to digital, which is recent. The move to globalization. Normally, we should had been one of the agencies to be bought by an American network. We were small, we were just in Europe. We were French. We were not working for Coca-Cola, we were not working for all these very large companies that made our competitors so rich and we didn't even speak a good English. Everyone remembers the quote of Martin Sorrell, when he was interviewed in the late 1990s. People were asking what will be the future of advertising and who would be the player in 2000, and he mentioned WPP, he mentioned Omnicom, he mentioned Interpublic. And one [reporter] raised his hand and said, 'and what about Publicis?' He said: '"Well, they will be swallowed. They will be swallowed.' We were not swallowed - we swallowed. So to have the right strategy at the right time is important."

When did you decide that you would do the swallowing?

"In 1995. That was the time of the decision, in '96 we started to acquire."

What countries did you invade first?

"At the same time, in the same week: Canada, Mexico, Brazil. After that, Singapore, the Philippines. And it was like machine guns, we were acquiring one agency in each country every other week. Because a client told me: 'If you are global, you have to be global. You cannot tell me that your globalization will take five years. Because I have to make decisions.'"

Who was that client?

"Nestle."

In how many countries do you operate today?

"In 104."

What proportion of your business does France account for?

"Nine percent."

And in 1995, when you launched your buying spree, what was France's share?

"In 1995 France was slightly over 50 percent [of revenues], and 70 percent of our profits. Now it's nine [percent of revenues] and 10 percent of our profits."

Overnight, you morphed from a French company into an international giant.

"The right strategy at the right time. The second thing we did well was acquisition, being fast. And when I make a decision, people know that I'm not going back."

And how quickly do you make decisions?

"It depends. It can take a minute, it can take two weeks, three months, depending on what it involves in terms of investment. If it is a management decision, it's pretty quick. If it is an investment strategy [then] I need to make sure that this is the right thing."

The Razorfish purchase you have just closed - how long did that take?

"Razorfish is a decision that was made immediately. We already had the plan, we knew that it would come."

Do you need time to build trust among your people?

"The other thing that I have done quite well was to pick the right people, and to build with them loyalty and confidence. This is something that has been really one of my great lucks. I have been very lucky to pick the right people."

How much time do you spend with clients?

"Most of my time. You can't be in the business without being close to the client."

The French have the image of people who know how to strike the work-leisure balance. What is your daily routine like?

"I'm at the office between 6 and 6:30, and I leave at 9 [P.M.], [on evenings] when I do not have dinner with clients."

And weekends?

"Most of the time I work on Saturday morning. I should not say that to you [because of the Jewish religious prohibition against working on the Sabbath], but yes, I take Saturday morning to work quietly."

At home or at the office?

"At the office. I have a computer at home and when I travel I work much more."

What does the word 'vacances' mean to you?

"Vacances means I'm doing the same - but with my family."

Meaning?

"That I'm connected, I have my computer, I have my Blackberry but at the same time I am with my wife and sometimes with my son and with his family.
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